Can a former Garden Centre Group boss transform Homebase?

Tuesday 01 December 2015 - Talya Misiri

Former executive of the Garden Centre Group Nicolas Marshall is looking to bid for the home improvement branch of Home Retail Group, Homebase. Marshall told the Financial Times that he had been interested in the retailer for the past few years.

Whilehe has been discussing his next move with private equity groups, the Home Retail Group is yet to be approached. Though its Argos chain is suffering, bankers have suggested that Homebase could be valued at several hundredmillion pounds as its profits have increased under the leadership of former Tesco Executive Echo Lu.

If the acquisition were to be made, it has been suggested by those close to Marshallthat he may be looking to lessen Homebase’s DIY focus and transform it into a softer, family friendly retailerwith pet products and concessions and more garden centre outlets.

Marshall is not alone in his recent interest in Homebase: multiple private equity groups are also eyeing the Home Retail branch. “It is definitely back on people’s radar,” said one of the bankers.

Home Retail Group has not commented on this speculation and insists on focusing on its peak trading period for the year (despite the group’s closure ofapproximately a quarter of the Homebase store estate).

Analysts estimatethat a potential bidder for Home Retail would be expected to pay around £1bn, while the same estate would have cost more than £3bn five years ago.

In addition, Home Retail shares fell by almost 16% in a single day last month after profit warnings had been announced along with concerns over Christmas trading and investments as its Argos business continues to suffer.